The Republican budget proposed by Paul Ryan replaces Medicare with a "voucher" system. In trying to sell this turkey, he's thrown everything he can at it: It's just like Congress has. It's just like Romneycare. It's a floor wax, it's a dessert topping. What do you want to hear, rube voters? That's what it has.
If one takes some anti-nausea pills and looks at his web site, however, the contradictions within the plan stand out. It's not a serious plan; it is just a dogs' breakfast of slogans thrown together. Nobody but an extremist ideologue could imagine that this has any legs. But it's what the House has passed.
Let's look carefully and see what he says, and figure out what it means.
Ryan begins by attacking rising costs, as if he could do something about it:
Every American should have access to affordable health insurance, and the ability to acquire preventive health care and treatment – regardless of employment, health status, or income level. No one should face bankruptcy because of a catastrophic illness; no one should be denied health coverage because they are branded “uninsurable.” Yet few will be able to afford health care or insurance if rising costs continue to spiral out of control. The only way to ensure that all Americans have access to quality health care is to confront these rising costs and the market distortions that created them. Such an approach will not solve every problem in the complex network of health care delivery and financing, but it will correct the most fundamental flaws.
So his key premise is that the reason people don't have insurance is because costs are out of control. And he pays lip service to bankruptcy and being "uninsurable". BUt "access to affordable health insurance" is not the same thing as actually
getting insurance. It's not the same thing as having
useful insurance -- scam artists like HealthMarkets sell cheap junk insurance that one can buy, but which doesn't actually cover much. And even "affordable" is relative -- it may be affordable to the average congresscritter, but not the actual person needing it. But to Ryan, that's affordable.
The heart of his plan for seniors is throwing out the government-run Medicare system (covers everyone) and replacing it with individual insurance. Not a lot of Americans actually have that. Most get it through work, and most large-employer group plans do not have preexisting condition clauses. Individual plans usually do.
In fact, he not only wants to do away with Medicare, but he wants to do away with employer-based insurance plans almost entirely. Including, I suppose, the one that covers federal employees, including congresscritters:
Ownership of health insurance must be shifted away from third parties to those who are actually using it. In place of the current Federal tax law creating the market distortion – the individual income tax exclusion for employer-sponsored health insurance – every American (except those enrolled in Medicare or a military health plan) will have the option to receive a refundable tax credit – $2,300 for individuals and $5,700 for families – to pay for health coverage.
So employed Americans must face the individual market too. And companies who have the best benefits today, like unionized ones, will save a bundle. The current tax deduction for employer-based insurance goes away, replaced by a uniform tax credit. (This was part of McCain's 2008 plan too.) So if you're in a high-cost state where a policy costs $20,000/year, you get the same credit as one in a low-cost state where a similar policy costs $12,000/year. Contrast with the current deduction applied to actual costs. So this is a big transfer of wealth from the high-cost states (mostly blue) to low-cost state (mostly red).
Does he have any idea how much coverage actually costs? I doubt it:
Any individual who obtains health coverage that costs less than the credit will receive any leftover amount as a payment from the health plan, to be used for other health expenses.
Maybe in some rural areas, a 25-year old with a perfect health record can get junk insurance for the amount of credit he proposes, but in many places the cost is 3-4 times that much. Maybe he remembers when the first Mustangs were advertised for $2368. Medical insurance prices have risen faster than Mustang prices. But perhaps the Jim'n'Tammy Faith Healing Plan will be that cheap. So those base voters will get a break. He tries to deflect fear of junk insurance:
Benefits by the Same Standard Used For Member of Congress. Plans offering coverage through an Exchange will have to meet the same statutory standard used for the health benefits given to Members of Congress.
Sure, but since his plan does away with employer-based plans in general, members of Congress will apparently be moved to the individual market too. He didn't say the same standard
currently used for members of Congress, did he? Look at what his friend Scott Walker is doing to public employee benefits in Ryan's home state, after all.
If everyone is stuck in the private market, how does he deal with pre-existing conditions? Well, maybe coverage has to be universal. For non-Medicare-age patients:
Universal Access: Everyone, regardless of income, employment, or geography is eligible for the credit. There are no screenings, income-verification tests, or health criteria. Except those receiving Medicare or Tricare, every American citizen with a valid Social Security number may take advantage of the tax credit. Also, because it is refundable, ownership of health insurance is available to every American.
But wait. You get your
tax credit regardless. But not insurance. Ownership is "available" to every American, but insurance companies aren't being regulated to force them to provide it. That would be bad for their business! But wait, what's this about state-based exchanges?
State-Based Exchanges. Health care services should be easier to use, should be more predictable, and should provide integrated care in a more equitable manner. The current regulation of the insurance market does not give health plans incentives to cover sick patients. When patients do get sick, insurance companies have an incentive find ways of preventing that person from re-enrolling in the insurance plan. Insurance reform must be the linchpin of any health care reform. A one-size-fits-all approach dictated by Washington cannot solve the diverse problems that citizens in various States face. What is needed is a consistent and fair market, so everyone can afford coverage. Patients should choose which health care provider they trust. The freedom to choose creates enhances competition, fosters higher quality care, and puts downward pressure on costs, making care more affordable.
Geographic differences are a significant driver of current health care problems. The characteristics of patient populations differ from State to State. This means the type of basic medical care also differs from State to State. A uniform, national health care plan ignores these regional differences and lowers the standard of care the medical community can provide. Allowing each State to develop and regulate health coverage that meets the unique characteristics of its population and economy will encourage the innovative and patient-oriented health care that should be the hallmark medicine in America.
Oh, I see. Romneycare is okay after all, since it's run by a state, and in Ryan's plan the federal government orders the states to run exchanges, but Obama's plan is bad because it is the federal government telling states to run exchanges... by the way, how narrowly can you split a hair?
But here in Massachusetts, the reality is that the Health Connector (as the exchange is named) acts as a high risk pool. If you can qualify for any kind of group, the rate is likely to be better. The individual market has moved over to the exchange, where it's not underwritten -- no rejections, no repricing based on pre-existing conditions. So what does Ryan's exchange not do?
Establishing High-Risk Pools. State health insurance high-risk pools will offer affordable coverage to individuals who would otherwise be denied coverage due to pre-existing medical conditions, making coverage affordable for those currently deemed “uninsurable.” States may offer direct assistance with health insurance premiums and/or cost-sharing for low-income and/or high-cost families.
Uh, wait. If there's an exchange, what's the high risk pool? The ACA sets up high risk pools to cover a fraction of the uninsured
until the exchanges kick in as of 2014. So is the Ryan exchange just an advertising medium for underwritten healthy members only plans? I guess it's not as good as Romneycare after all.
Welll, what about us oldsters and Medicare?
Medicare Payment. For future Medicare beneficiaries who are now under 55 or younger (those who first become eligible on or after 1 January 2021), the proposal creates a standard Medicare payment to be used for the purchase of private health coverage. Currently enrolled Medicare beneficiaries and those becoming eligible in the next 10 years (i.e. turning 65 by 1 January 2021) will see no changes in the current structure of their Medicare benefits. The payment will be made directly to the health plan designated by the beneficiary (similar to the administration of the refundable health care tax credit), with the beneficiary receiving any leftover amount as a payment from the health plan, or assuming financial responsibility for any difference in the payment and the total cost of the premium. This allows the Medicare beneficiary to invest the leftover amount in a Medical Savings Account [MSA] to pay for other medical expenses, or to purchase long-term care insurance.
So he's trying to protect his elderly voting base by promising that the rules only apply to young'ns, but if his deficit reduction goals aren't met -- and they require unemployment to fall to below 3% without much inflation, so you'd better believe in the Easter Bunny to believe that they will -- then there will still be big deficits. And the easiest fix is to increase the number of people transferred out of legacy defined-benefit Medicare into his declining-defined-payment scheme.
Once again, he acts as if the discount coupon given to insurance companies after the retired taxpayer pays their share of the premium will be so generous that the retired taxpayer might get a refund. From Santa Claus, no doubt, given that the amount of money budgeted is far below the cost of the plan being replaced. If you don't come up with the "co-pay" share of the premium, though, then you get nothing. But at least the program isn't mandatory -- you're free to go uninsured and just stick your acute-care bills on the emergency room until you die from lack of proper care.
Oh, and that red state-blue state thing? It applies to Medicare as well as the worker tax credit:
For affected beneficiaries, the payment replaces all components of the current Medicare Program (Medicare fee-for-service, Medicare Part B, Medicare Advantage, and Medicare Part D). Payment amounts are income-related and risk-adjusted. They also are partially geographically adjusted, with the geographic adjustment phasing out over time.
So after a few years, Bismarck and Boston will get the same payments. But since payments are
income-related, not everyone will get the same out of the system:
The payment amount is modified based on income, in a manner similar to that for current Medicare Part B premium subsidies. Specifically: beneficiaries with incomes below $80,000 ($160,000 for couples) receive full standard payment amounts; beneficiaries with annual incomes between $80,000 and $200,000 ($160,000 to $400,000 for couples) receive 50 percent of the standard; and beneficiaries with incomes above $200,000 ($400,000 for couples) receive 30 percent.
It might sound superficially progressive to means-test the program, but that's a well-known trap. Social Security is popular precisely because it is not means-tested. It's not "welfare", a historically-pejorative term the Republicans are already starting to apply to Medicare and Social Security. It's retirement insurance, bought and paid for. Ryan's plan sticks an upper-middle-class couple with a much bigger premium, even though they've paid more in. This is a way to generate political opposition from the campaign-donor class.
And what about that bane of coverage, individual underwriting? Under Ryancare, elderly folks will all get underwritten. The rate they pay will depend on their health. The coupon will make up for some of the difference.
Risk Adjustment. When the plan is fully implemented, Medicare beneficiaries will receive on average the standard $11,000, with the flexibility to receive a positive adjustment of that amount based on a risk-assessment from their chosen health plan. Once enrolled, beneficiaries may complete initial health exams through their insurance plans to determine whether they are eligible to receive a higher risk-adjusted payments. Each health plan must submit to the Medicare program any necessary results of the exam for Medicare to determine an adjusted risk-assessment.
Under the current system, Medicare frequently overpays for some services and beneficiaries and underpays for others. By risk-adjusting beneficiaries’ payments based on their health condition, this reform targets support to those who truly need additional help.
Yep, nothing like subjecting old people to exams to prove that they're healthy enough to be ensured. We can't have healthy folks paying a premium that covers the cost of the unhealthy, after all. Health care is, to the Republicans, a luxury for the healthy.
Those are only some of the lowlights of his plan, based on what he proudly puts up on his web site. Not so visible are some extra details, like raising the Medicare age to 67, and then phasing down that $11,000 support to a lower value over time, so that the actuarial value of Medicare falls from around 75% to around half that. But nobody actually reads the whole text of a Congressional bill, right? Just the lobbyists and ideologues who wrote it. And that's what Ryan is counting on. This plan has more holes in it than Albert Hall, and is likely to be highly unpopular.
Where might its real savings come from? It actually could reduce the federal share of medical care expenses significantly. It's just a discount coupon, not insurance, he's proposing. Ever get one of those ads in the mail that look like a check, but are really just a dollars-off purchase on that new Chrysler you never wanted? Same thing. Don't buy the insurance, no federal share to be covered by the program. And the larger number of uninsured elderly will reduce the average life expectancy of the population. More dead grannies means lower Social Security and Medicare payouts. It's essentially a plan to save money by killing people. Let's get the word out so voters know what's really in it.